SHORE BANCSHARES INC appointed new CEO

ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.


The Merger Agreement requires SHBI to take all action necessary to appoint or elect, effective as of the effective time of the Merger, four individuals as directors of SHBI and Shore United, one of whom is required to be Alan J. Hyatt, Chairman, President and Chief Executive Officer of Severn and SSB. In addition, David S. Jones, John A. Lamon, III and Konrad M. Wayson, existing directors of Severn and SSB, were proposed as the other three directors (all four, collectively, the "Director Nominees").


Pursuant to the terms of the Merger Agreement and in accordance with SHBI's Amended and Restated By-laws, on October 26, 2021, SHBI's Board of Directors (the "Company Board") and Shore United's Board of Directors (the "Bank Board") increased the number of members of each of the Company Board and the Bank Board from ten (10) members to fourteen (14) members, appointed each of the Director Nominees to serve as directors of SHBI and Shore United, and appointed Mr. Hyatt as the Chairman of the Boards, each effective as of the effective time of the Merger. The Company Board appointed John A. Lamon, III to Class I, David S. Jones to Class II, and Alan J. Hyatt and Konrad M. Wayson to Class III of the Company Board to serve for a term that coincides with the remaining term of that class and until his successor is elected and qualified.


Each of the Company Board and the Bank Board has not yet determined on which committees of the Company Board and the Bank Board the Director Nominees will serve. Each of David S. Jones, John A. Lamon, III and Konrad M. Wayson will receive the same compensation as currently paid to other Company Board and Bank Board members.


2


Effective October 31, 2021, Shore United entered into a consulting agreement with Mr. Hyatt. The term of the consulting agreement commenced as of the effective time of the Merger and continues for five years. The consulting agreement provides for an annual consulting fee in the amount of $150,000, which will be paid in monthly installments. The consulting agreement may be terminated by either party by thirty (30) days written notice of termination. In the event that the consulting agreement is terminated without cause (as defined in the consulting agreement), then Mr. Hyatt would be entitled to receive all compensation owed through the remaining term. In the event of a change in control, Mr. Hyatt would be entitled to receive all compensation owed through the remaining term, unless Mr. Hyatt agrees for the agreement to be assigned. In the event of termination of the agreement, Mr. Hyatt is subject to a two-year non-competition provision. The foregoing description of the consulting agreement is a summary and is qualified in its entirety by reference to the consulting agreement for Mr. Hyatt, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 5.02 by reference.